M3 reached $125.84B Over the Period Ending March 31, 2022

M3 reached $125.84B Over the Period Ending March 31, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) significantly decreased by LBP 241B ($160M) to stand at LBP 189,710B ($125.84B) by the week ending March 31, 2022. As such, on an annual basis, M3 retreated by 6.17% year-over-year and by 4.78% since year-start (YTD).

In details, M1 retracted by LBP 467B ($310M) by a week to settle at LBP 50,928B ($33.78B) by March 31, 2022. The decline is attributed to the decrease in currency in circulation by LBP 614B and to an increase in demand deposits by LBP 147B.

In turn, total deposits (excluding Demand deposits) added $150.27M, owing to an increase in Terms and saving deposits by LBP 134B ($88.89M). In the same token, deposits denominated in foreign currencies expanded by $61M.

As such, the rate of broad money dollarization increased from 62.594% in the week ending March 24, 2022, to 62.722% by the week ending March 31, 2022.

Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 1.96% and 0.52% in March 2021 to 0.87% and 0.16%, respectively, in March 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 8.02% and 7.14% in March 2021 to 5.58% and 5.72%, respectively, in March 2022.

Analytically, the money supply M3 can be derived from combining the balance sheet of BDL with the balance sheet of banks to arrive at the monetary survey of the banking system. The resulting M3 would be equal to the sum of: net foreign assets (NFA), credit to the private sector (CPS), net credit to the public sector (NCPS), and other items net (OIN). Latest data show that in March 2022, M3 stood at $126.50B, 5.67% less than March 2021; NFA were $14.89B, less by 2.68% YOY; CPS was $25.29B, less by 22.93% YOY; NCPS was $29.87B, less by 25.17% annually; and OIN were $56.44B, higher by an annual 22.53%, and comprising mostly (in BDL’s terminology) other assets which include open market operations and seigniorage, considered to be a controversial account by some.

In its treasury bills (T-Bills) auction dating March 31, 2022, the Ministry of Finance (MoF) raised LBP 113.975B ($75.60M) through the issuance of T-Bills maturing in 3 months (3M) and 1 year (1Y) and notes maturing in 5 years (5Y). A higher demand was recorded on the 5 years notes which grasped 70.21% of total subscriptions, while the 1Y and 3M T-bills accounted for the remaining shares of 19.78% and 10.01%, respectively. In more details, the yield on 3M and 1Y stood at 3.5% and 4.5%, while the coupon on the 5Y notes reached 6%.

Source: BDL; MoF

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